Explore Your Options by Tom Gentile
TRADING THE ENERGY PULLBACK
While speaking in front of groups this year, I often talked about longer-term patterns associated with recent markets. One I have spoken of this year is the energy bull cycle, which I wrote about in this column in the May 2014 issue of this magazine. I had a student recently ask me what could be done when the bull cycle is over in July. I quickly responded, “Trade it the other way,” but then realized that that answer would soon be followed by the additional question, “How?” Since we are at the end of this pattern now, I’ll discuss some opportunities and strategies that you could take if you believe that the crude oil markets will be in pullback mode into the fall.
Crude oil futures and the bear put spread
Crude oil futures are what I refer to as the world’s currency. Unless everyone gets on board with some sort of alternative fuel, oil will continue to dominate the headlines and the energy markets.